BMI

[Count von Altibar]

Aer Lingus are not in the frame for BMI, if anything it's EI that could be subject to takeover, they've been fighting O'Leary off for years now. This is a chance for the big player alliances to fight the bit out over the Heathrow slots and IAG will be the front-runner in my opinion. No matter what the others offer, IAG will probably better it as they cannot afford to give away territory at their home airport. Sir Dickie is starting to gather speed after seemingly slow getting out of the blocks and it's a distinct possibility that some form of deal could be done with VS joining Star and merging the two operations. It's early days as yet but one thing to note is that Lufthansa want the deal done and dusted fairly rapidly.

[Shamrock350]

EI will more than likely be in the same boat as BD as the Irish Government is looking to sell it's 25% and Ryanair has said it would also either work with (whatever that means) or sell it's own 29% stake in EI to another "financially strong" airline. The Irish government haven't been very clear, one minute it sounds like EI will be sold the following day, the next it's not until next year and just yesterday they said the sale will go ahead before saying no decision had been made a few hours later.

There has been interest in EI, it's no secret IAG have been sniffing around so both EI and BD may end up part of IAG at some stage.

[Count von Altibar]

I agree Shamrock, looks like Willie could snap-up the both of them, how ironic for an ex-EI skipper!. I can definitely see the Irish government going ahead with the sale to get some more money given the current state of the economy. It seems that MOL has been hell-bent down the years on wrecking EI, where is his national pride?

[Rougueg]

Any timeframe for the sale?

Hi all,

What sort of timeframe do you think is invoved here for the sale of the BMI group?
Cheers
.

[xwindflirt]

It has been reported that they wish to have this concluded by the end of the year

[Businesstraveller]

Diamond Club Accounts

A somewhat minor point all things considered, but would anyone care to speculate as to what might happen to Diamond Club accounts.
Could be an increase in pre-emptive reward flight booking activity in the lead up to a sale. Don't want those hard earned miles being flushed down the toilet with the stroke of a pen after all...

[stormin norman]

BA are going through a large and expensive fleet renewal.I'll be suprised if they have the cash to splash out on expansion.They got Dan Air for a pound but took on the liabilities. To do that with BMI would be a financial suicide mission.

[LD12986]

BA are going through a large and expensive fleet renewal.I'll be suprised if they have the cash to splash out on expansion.They got Dan Air for a pound but took on the liabilities. To do that with BMI would be a financial suicide mission.

IAG has the cash. An often overlooked aspect of the BA-Iberia merger is the increase in balance sheet strength from the deal as Iberia had a very high cash balance and low debt.

Of the three European majors, IAG has the lowest net debt (480m Euros from memory) compared to roughly 1bn Euros for LH and 6bn Euros for AF-KLM.

That said, if BA was able to get a decent tranche of slots out of any downsizing/disposal of bmi that might be good enough when compared to the expense and risk of buying bmi outright, not least when everything it has done over the last ten years has been geared towards stripping out complexity.

[LD12986]

A somewhat minor point all things considered, but would anyone care to speculate as to what might happen to Diamond Club accounts.

Really depends on what is agreed with LH. A buyer might inherit the programme or LH retain it and transfer everyone into Miles & More.

[brian_dromey]

IAG would not be necessarly all that bad a fit.

IAG has a presence in both the Regional and LCC markets.

BD Mainline - obviously this would be integrated overnight into BA, I think the majority of the mid-hauls, along with BHD and DUB would be kept, short term at least. EDI, ABZ and MAN would be the first to give their slots to new routes, Its also hard to say how many, if any of the slots LH currently uses to feed hubs would return to BD. In any case these may count as 'divested' slots.
I could possibly see all Domestic/Ireland service moving back to T1 to make room at T5 for the mid hauls and other new services.

Baby - IAG has a low cost airline in the shape of Vueling. Many of Baby's biggest markets are in Spain, AMS, etc which are Vueling markets too. It would make sense that these two airlines work together, especially in a situation where the "bmi" brand is disappearing. Go Mk 2 anyone?

Regional - this is slightly trickier, but there is the possibility that Regional could work with BA Cityflyer or be sold off separately to flyBe.

[WHBM]

The buk of the "mid haul" flights are those acquired with the British Mediterranean operation in 2007. This had been operated as a BA franchise for the previous 10 years, and as far as the passengers were concerned was not discernable from the main BA operation.

I believe BA had first refusal on the business when it was offered for sale, which would just have bee a straight integration of what de facto already existed. Why did BA walk away from this and thus BMI managed to get into this market ? Why are things different now such that BA would want these previously unwanted routes back ?

[Flightrider]

It's quite a long story but basically BA didn't stand in the way of bmi's acquisition of BMed on condition that bmi sold the Heathrow slots to BA over a period of time. Most of the original BMed slots are now held by BA and bmi continues to fly the former BMed routes plus some of its own expansion into similar territory using slots which it has reassigned from routes like LHR-CDG, BRU, AMS, MME, LBA that it no longer flies.

BA was only interested in the LHR slots. That will undoubtedly be its main aim this time round as well.

[Aero Mad]

Without IAG cash, and with a very different situation regarding fuel prices, profitability and industrial relations, was BA in a position to jump at BMED? Just a thought.

[brian_dromey]

I think BA got what it wanted and needed from B|MED at the time. They also got a fairly extensive code-share agreement for a long period of time.It is easy to say BA have no interest in serving the mid-haul markets, but due to bilaterals BD is the only UK airline that can serve many of the routes.

I imagine that the domestic and Euro routes where BA already operates would be the first to have their slots reassigned, it makes logical sense to cull those first and then the mid hauls. Logically the BD fleet of A319s and short haul A320s might end up refleeting LGW as more A321s and long-haul aircraft enter the BA fleet at LHR.

I dont know if any of this would happen, but it would seem a possible scenario in the event of an IAG buy-out of bmi.

[BMEDFO]

I agree. bmi mainline will be broken up by slots.

Baby will be closed and maybe regional sold off to Flybe at a knock down price.
Mainline, no hope every one want's the slots not loss making routes.

[pinhammond]

It is interesting to read the speculation about the future of bmi. But the real truth is that LH would only be interested in getting rid of the company beacuse even their massive management inputs cannot solve the problem of a company that is losing £38 for every passenger sector. That couled even mean that the loss per passenger is at least 50% of the revenue kept by bmi(after taxes etc). It is a truly diabolical trading position. But LH has access to virtually unlimited management talent to solve the problem and they have failed. In such a situation how can anyone else be expected to buy this wreck? It must surely be broken up. baby and regional are virtually worthless. So mainline will slots will be put up for auction, that is my expectation. Number 1 winner will be IAG. Let us wait and see.

[brian_dromey]

I suppose the speculation goes that most of the BD flights would go away and be replaced with routes BA know can work. There is a possibility that routes that look terrible when operated by BD may make more sense as part of the greater BA route network.

[WHBM]

Here's one aspect I have yet to see answered.

Heathrow slots are worth a fortune. Each pair. All sorts of carriers, both long and short haul, want access to Heathrow. They pay this high price because they are confident that they will make good money there at what is far and away the No 1 yield generating airport in Europe. Right ?

BMI have the second-largest allocation of slots at this goldmine destination, after BA. They are ahead of Virgin or any carrier from overseas. So they must be able to build on this for one of the most profitable carriers around. Right ?

Wrong, it would seem. So how is it that anyone else can operate into Heathrow and make good business, whereas BMI in this pole position are apparently shelling out nearly twice as much in costs as they are taking in revenue ?

Furthermore, we read that Regional is one of the better performing parts of the business, and one of the features of Regional is that they DON'T operate through Heathrow.

[JSCL]

WHBM is right - there's only room for ONE dominant British airline at LHR is my sentiments. As I previously stated, maybe BD would do excellent dealing with BHX to make BHX in to their current LHR for their hub and spoke out of BHX - that's their homeground, why not? I can't see it being any worse for them than the current situation...

[davidjohnson6]

JSCL - alas there is rather more corporate cash sloshing around London than Birmingham. Wasn't so long ago that BA had a sizeable operation based in both Birmingham and Manchester. BHX is now dependent on the likes of Flybe, Ryanair, a bit of baby and some leisure centric routes / airlines for its largest carrier customers.